Tech startup of the month. (High Tech Coloradobiz).

POLIVEC, INC., COLORADO SPRINGS 

www.polivec.com

FOUNDED: OCTOBER 1999

(as E-business Technology Inc.; renamed Polivec in January 2002)

LAUNCHED OPERATIONS: FEBRUARY 2002

INITIAL LIGHTBULB: In the early 1980s, Dr. Bruce Hartley manned a missile warning post at NORAD, but he's long since moved on to fending off totally different foes: hackers. Now a 15-year vet of IT security, Hartley -- along with co-founders Tony Locke and Ron Toman -- started PoliVec in response to what they saw as a market need for policy-driven security software.

From their previous experience working together at Trident Data Systems and DMW Worldwide for such clients as the Department of Defense, the founders "have a pretty good understanding of what the real pain points are from a security standpoint," said Hartley. "(Companies) write a security policy, they do an assessment, they make corrections, and they think they're reasonably secure. What happens invariably is something changes in their system environment. They have no idea what just changed in their security posture until they get hacked."

As an alternative to this backward-looking approach, the 35-employee PoliVec developed a suite of software that allows companies to proactively build security policies, identify weaknesses in their ever-evolving IT architecture, and ultimately keep the bad guys at bay.

IN A NUTSHELL: PoliVec is shorthand for 'Policy Vector,' meaning the company's products are designed to integrate security policies with the underlying Windows NT/2000 infrastructure. "We tie the policy and the configurations together," Hartley said. "For the first time, the management and the IT organization are really tied together from a security perspective."

The company shipped its first products, PoliVec Builder and PoliVec Scanner, late last year, and unveiled its third product, PoliVec Enforcer, in May. Backed by proprietary patent-pending technology, each is a different piece of the security puzzle. Builder guides the user through the process of developing a security policy, Scanner analyzes the system and identifies weaknesses, and Enforcer monitors the network in real time and alerts against security threats.

"We are extremely efficient," said Hartley. "I can paint the entire security configuration of a device in 300 to 400 bytes of data. One of our competitors, their agent size is 135 megabytes. Our agent is 50K ... yet we have greater functionality."

Mid-sized clients pay a one-time licensing fee for each product: $7,500 to $10,000 for Builder, about $25,000 for Scanner, and roughly $50,000 to $100,000 for Enforcer. Maintenance costs 20 percent of the total investment annually.

"It's one of those relationships we've become very comfortable with," said Butch Hill, VP of information technology at Air Academy Federal Credit Union in Colorado Springs, one of PoliVec's first clients. "They have some approaches to security brought out of their work with the DOD."

In January, PoliVec named Roberto Medrano CEO. Formerly the general manager of Hewlett-Packard's e-services and Internet security division, Medrano is a well-known figure in the IT security world.

THE MARKET: According to a recent forecast by IDC, the worldwide market for software security -- $11.8 billion in 2000 -- is poised to grow to more than $35 billion by 2005. IDC further projected that the specific space occupied by PoliVec, the 3A (authentication, authorization, and administration) software security sector, would outpace the rest of the industry, growing 340 percent to $9.5 billion from 2000 to 2005.

"We're in the right space at the right time," Hartley said.

PoliVec is initially targeting the banking, credit and health-care verticals, a shrewd move considering recent legislation (such as HIPAA and the Gramm-Leach-Bliley Act) that heightened the requirements for companies that house private data. Current customers include Safeway Rocky Mountain Federal Credit Union, Denver Police Federal Credit Union, and Englewood-based CSG Systems.

FINANCING: The company closed its first funding round of $8.5 million in May 2000, and is currently on the cusp of closing a second round in the $5 million to $8 million range, said Hartley. Palo Alto, Calif.-based Crimson Ventures funded the entire first round and is also a player in the second round.

The presence of only one VC firm in the first round "was very much an intentional act," Hartley added. "We were able to focus on building product while managing only one investor."